You’ve had your eye on it for a while. That cherry red, supercharged V8 speed demon at the local car lot that seems to whisper your name each time you pass by. Its siren song is so persistent that you’ve now begun bargaining with yourself. You could cut out your recreational spending for a year and maybe refinance your home or reduce your monthly grocery bill. Who needs to eat, anyway?
Undoubtedly, your spouse will remind you that you do, in fact, need three meals a day and may also not so lovingly inform you when you’re in the market to buy a car, there are other significant ongoing expenses to consider, specifically auto insurance.
It’s no secret car insurance companies consider a number of factors about the vehicle you plan to insure in order to determine your insurance rates–and these rates can be a deal breaker for many potential buyers. Likewise, it’s important to be aware of some determining factors that affect insurance costs, like safety features and ratings, personal budget limitations and vehicle customization before diving head first into some pretty expensive waters. Check out these tips before heading to the car lot.
Safety Features, Ratings
Unfortunately, the formula for determining insurance rates is not a simple one, as different insurance companies value different features. However, most agree on a few standards. For instance, anti-lock brakes and built-in anti-theft devices will nearly always work in your favor, reducing insurance costs anywhere from 5 percent to 25 percent on the collision or comprehensive portion of the policy, depending on your insurance agency. In addition, airbags can yield up to a 40 percent discount applicable to the personal injury or medical payments part of the premium.
You should also realize the vehicle’s overall safety rating can work for or against you in terms of insurance costs. A four- or five-star rating implies that the vehicle has extra features to ensure the safety of the driver and passengers, and can make a huge difference in your overall premium charges.
Though many insurance companies claim a red car costs more to insure, there is little merit about whether the paint job affects insurance rates. Custom paint, for example, is considered a custom part, and cars with custom parts are generally more expensive to insure because replacement or repair is more costly than the factory standards. So, any kind of customization will bump up your insurance premiums.
Though the color of a car may not officially be listed as a reason for an insurance price hike, certain colored cars are more likely to be stolen than others. The paint job of cars most frequently nabbed include gold, green, white and black. A silver car is most often stolen, so red might not be such a bad choice after all.
Personal Budget Limitations
Your personal budget limitations are a huge factor in determining your eligibility for receiving a car loan. Many used-car dealers typically want to see that a buyer’s payment-to-income ratio is 15 percent or less, meaning their final monthly car and insurance payments add up to less than 15 percent of their gross monthly income. So, even if you save every penny and can afford to purchase the car of your dreams, your PTI and credit score could still put up a roadblock between you and your ideal vehicle.
Regularly exercising safe driving practices and being mindful of changing local traffic laws can help keep your insurance premiums down.
You could forego dinner and movie nights the rest of your life, as well as sell all of your Empire Strikes Back memorabilia to come up with enough money to purchase your speed machine. But there’s no guarantee, even after all the sacrifice, you’ll legitimately be able to afford it. Be aware of the lurking, ongoing costs that piggy back into your life with the purchase of a new vehicle and ask yourself if it’s really worth it. After all, you can’t eat a car.
Jayme Cook
Jayme Cook is a writer, English and Communications professor, zombie fanatic, maniacal reader, and Oxford comma enthusiast living in Phoenix.
